Embracing the changing beef industry structure as opportunity is the single best way to stay in business, according to Ed McMillan,director of mergers and acquisitions for ABG Inc., in Indianapolis.

From a current perspective, not all change is palatable. Nonetheless, he says by gathering information, monitoring macro trends and maneuvering business practices, feeders will continue in industry leadership positions.

'For years, gearheads in Detroit churned out hunks of iron that consumers didn't want -- and didn't buy,' McMillan says. 'The rest of the auto competition story is history, but beef can take a lesson from it.

'As an industry, we are too emotionally tied to what we do,' he says. 'I don't advocate losing that totally, but we have to temper it. We can't be beefheads if we're going to compete with other proteins. Some say the secret to competing is making beef production as efficient as poultry production.

'That misses the entire issue. Chicken isn't growing in market share because it has efficient production. It's growing because it's providing what the consumer needs.'

Finding the value consumers want and sharing it through an interrelated system are what need to be accomplished, he says. Those who get this done will be the future managers.

'We're going to see continuing feedyard consolidation,' McMillan says. 'However most feedlots will remain independent, but one owner will manage multiple locations. You'll see businesspersons who've participated in a supply chain business managing those locations.

'Each feedlot will have someone who knows how to feed cattle to meet specifications and timetables. Within this structure, the one who adds the most value to the business will be the person who ensures relationships are developed upstream and downstream to create value opportunities, partnerships and alliances.'

Who Will Drive This Change? Ultimately, beef processors, food stores and restaurants will drive this change. They have the most at risk because their brand name is on the line, according to McMillan. Beef marketers who understand the best way to deliver product specifications will create alliances up and down the line. Those who understand their future is tied to their ability to fulfill market expectations while minimizing market risk factors will be most successful in market penetration.

Cow/calf producers aren't immune from change either. McMillan says there will eventually be two sectors.

The business will evolve into two groups:

* The large, genetically consistent producers.

* A large group of small, part-timers.

'Those with the large genetic pool will be the primary targets to affect the quality chain. They can measure risks, rewards and return on investment,' McMillan says.

'Those in the business part-time or with few cows will move in this direction when the system creates incentives for them. The rewards must be tangible, though. And, people throughout the industry will determine which market sector they fit in, whether it's a Mercedes level, a Toyota level or even a Yugo level.'

Farmland, Laura's Lean, Certified Angus Beef and others are starting to effect this process. But, McMillan says even with these intermediary solutions, all needed mechanisms aren't in place yet. Purveyors, or ones that brand products going into groceries and foodservice will drive this change.

'If we don't change the way we do business, we're going to lose consumer market share and be unable to exploit global opportunities,' McMillan says. 'If we can't fulfill American desires, we sure can't fulfill those around the globe.

It Starts With Information 'We have to start with an open exchange of information and managers who can negotiate win-win situations,' McMillan says.

'To begin, a manager needs to address the core competencies of his business. Each yard has certain things it does well, whether filling a niche, feeding certain types of cattle or whatever it may be.

'If you're not sure what yours are, consultants can help. Secondly, understand your ownership's commitment to the direction it wants to go. Finally, determine strategically what the next steps need to be. Then focus, focus, focus.'

McMillan says you may find weaknesses that need shoring up, you may consider alliances, or you might build a plan that doesn't necessarily increase your volume, but finds a way to create another $10 or value per animal of which you can capture $4 or more.